Insurance premiums are being driven up as heavy claims from this summer’s floods are settled, according to the AA’s latest premium index.
Britain saw the worst flooding in 60 years over June and July and as a result insurers have been dealing with 130,000 claims to a cost of £3 billion.
Insurer relations director for AA Insurance John Close said: “Some predictions that premiums would rise by 15 per cent were overly pessimistic and, although I believe premiums will continue to rise as insurers dip into their reserves, I expect competitive pressure will keep increases affordable.”
According to Reuters, analysts and actuaries are saying the rise in premiums has not kept pace with the increasing claims and that car insurers have used reserve money to keep costs low and competitive. As insurers’ reserves run out, premiums could rise rapidly.
According to the Association of British Insurers there were around 10,000 motor claims following the floods and most were settled within a few weeks.
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